Standing Committee A

[Mr. Roger Galein the Chair]

Roger Gale: I apologise to the Committee for not observing the normal courtesy of being with you for the first sitting, but I notice that you appear to have made good progress, probably because of rather than in spite of that.

Clause 3

The “public benefit” test

Amendment proposed [this day]: No. 71, in clauseÂ 3,Â pageÂ 3,Â lineÂ 21,Â leave out from ‘whether’ to end of line 23 and insert—
“a body provides or intends to provide public benefit, regard must be had to—
(a) how any—
(i) benefit gained, or likely to be gained, by members of the body or any other persons (other than as members of the public), and
(ii) disbenefit incurred, or likely to be incurred, by the public in consequence of the body exercising its functions,
compares with the benefit gained or likely to be gained by the public in that consequence, and
(b) where benefit is, or is likely to be, provided to a section of the public only, whether any condition on obtaining that benefit (including any charge or fee) is unduly restrictive.
(2A) It is presumed that a charity established to benefit the natural environment, or the living species within it, exists for the public benefit.’.

Question again proposed, That the amendment be made.

Edward Miliband: Welcome to the Committee, Mr. Gale. It is a great pleasure to have you with us.
We had an interesting debate this morning on amendment No. 71 and issues relating to public benefit. I thought that it would be helpful to the Committee if I explained in the context of the amendment how public benefit will work under the Bill. Then I will deal with the specific issues raised by the amendment.
An organisation must satisfy two tests to be a charity: it must exist for a purpose under clause 2(2), and its purposes must be for the public benefit. To answer the question of my right hon. Friend the Member for Cardiff, South and Penarth (Alun Michael), who is not in his place, the purposes listed in subsection (2) are capable of being for the public benefit but are not necessarily so. A trust to relieve the poverty of one family member is for the relief of poverty, but would not be deemed for the public benefit.
The key question with which amendment No. 71 is concerned is how public benefit will be defined. As set out in the Charity Commission document “The Public Character of Charity”, the public benefit requirement means that an organisation must do two things. It must provide a recognisable advantage for people at a level that reflects their need; that is the benefit element. In addition, the benefits must be provided to the public at large, or at least a sufficient section of the community; that is the public element. Those are the general principles that apply across the board, but they are flexible enough to be applied by the Charity Commission and the courts in different ways, depending on the charitable purpose that they are considering. A large mosaic of case law underpins those principles.
That brings me to the substance of amendment No. 71. I shall deal first with the second part of the amendment, which would introduce a presumption of public benefit for charities that benefit the natural environment or species within it. The Government do not believe that that is desirable or necessary, and not only because the hon. Member for Cheltenham (Martin Horwood) seems to be introducing a second Cheltenham principle, which is to support presumptions of public benefit in one respect but not at another. The amendment is undesirable because it singles out one charitable purpose. It is unnecessary because a charity established to benefit the natural environment or a living species can be deemed to provide public benefit on a number of grounds, not simply the prevention of extinction, which I think was the hon. Gentleman’s concern. For example, animal welfare charities are recognised as charitable not because the animals are necessarily threatened with extinction but because of a broader acceptance of the public benefit of avoiding cruelty and animal suffering. I understand that the Wildlife Hospital Trust to which the hon. Gentleman referred qualifies on that basis.
Environmental protection is acknowledged to provide public benefit because it improves the living conditions of humankind. The Government think that that part of the amendment is unnecessary.

Alun Michael: My hon. Friend is making an important point on the issues that I raised this morning. Would it not be correct to say that just as animal welfare produces a public good because it is recognised to be of public benefit without necessarily benefiting individual human beings, environmental protection need not directly benefit individuals to satisfy the public benefit criteria?

Edward Miliband: That is correct to an extent. I do not think that my right hon. Friend was in his place when I said it, but is important to restate the point that purposes under clause 2(2) can be for the public benefit but are not necessarily so. The public benefit test is applied by specifically examining the individual charity and seeing whether it benefits a sufficient section of the public.
To illustrate that important point, I shall quote from the case of IRC v. Baddeley. Lord Somervell of Harrow, talking about a charitable trust, said:
“There might well be a valid trust for the promotion of religion benefiting a very small class. It would not follow at all that a recreation ground for the exclusive use of the same class would be a valid charity”.
The point I am making is that there is a general public benefit test: a sufficient section of the community must be benefited. That test is then specifically applied, and has been applied by the courts—there is a bedrock of common law on the matter—in different cases in different ways. My right hon. Friend looks quizzical, so I shall give way to him.

Alun Michael: The difficulty is applying the same principles to a variety of the 13 categories that we have in the Bill. Let us stick with the animal welfare point for a moment. Does my hon. Friend accept that, in the terms that he used earlier, one does not have to show that members of the public benefit from the pursuit of animal welfare in order to show that it is charitable and in the wider sense of the term produces that “public benefit”? I think that I virtually paraphrased his words. If we were to paraphrase that in relation to others of the objects, surely it would explain the situation clearly.

Edward Miliband: I always hesitate to disagree with my right hon. Friend, but ultimately there must be some benefit to the public in order to show “public benefit”. It is pretty clear from established case law that animal welfare charities are deemed to provide public benefit, because there is public benefit in avoiding cruelty and suffering to animals and that redounds to the benefit of humankind. That is my understanding of the basis on which the courts have made their decisions. In a way, the meaning of public benefit is that it must provide benefit to the public.

Alun Michael: I am sorry to intervene on my hon. Friend again, but surely the same must apply in relation to the environment. If it is accepted that the protection of the environment more widely produces a general public benefit, one would not have to show that a particular group, or number or proportion of the public benefit from that any more that one would in relation to animals. Surely the same test must apply.

Edward Miliband: There has to be a wider public benefit. It can be a collective benefit, for example, one that comes from preserving the environment or avoiding cruelty or suffering to animals. The point that I am making to my right hon. Friend is that ultimately we must come back to a benefit to the public in some form or another. That can be collective; it does not need necessarily to be about direct benefit to individuals. That is the point about animal welfare charities.
This is important to get clear, because in a way public benefit is the basis on which the Bill turns. We are rightly relying on the common law definitions of public benefit, which have built up over 400 years. The matter therefore takes some explaining and understanding, because the criteria have been built up over a number of years and apply in different cases in different areas.
I move on to the substance of the amendment proposed by the hon. Member for Cheltenham. It might not be specifically targeted at private schools—it might be more generally targeted—but one of the things he clearly has in mind is schools. I shall say something about the position relating to schools because I do not accept his characterisation, as I said on Second Reading.
The Bill is based on four principles. The first is that charities must show public benefit, and there is no free pass for any charity—that is the reason to get rid of the presumption in favour of education, religion and the relief of poverty. The second is that the Charity Commision will have the final say, depending on the circumstances of the individual charity, as has always been the case and has been demanded by the National Council for Voluntary Organisations and others. The third is that indirect benefit that is simply relief of the public purse should not be regarded as satisfactory. The fourth is that, as it stands, the Bill can raise the bar of what is required, while also raising the overall standard of education in this country.
The hon. Gentleman referred briefly to re Resch. As I said on Second Reading, I am not sure that I accept his characterisation. He seeks to introduce a clarification derived from recent Scottish law. On Second Reading, my right hon. Friend the Chancellor of the Duchy of Lancaster said, regarding the advisability of a clarification of the Bill:
“By trying to be more specific, we do not want to exclude organisations that should not be excluded. I hope that hon. Members, especially my hon. Friends, understand that we are determined that there will be a test of public benefit, which we expect to be meaningful, but that trying to identify matters too clearly frequently brings disbenefits that nobody anticipated.”—[Official Report, 26 June 2006; Vol. 448, c. 26.]
That is one danger in what the hon. Gentleman proposes. I shall explain why.
Scottish charity law is now based on a different legal framework than the law of England and Wales. Under the Bill, the public benefit test is based on “charitable purposes” as established in common law. Under the new Scottish law, the public benefit test is based on the activities of the bodies that seek to become charities, and the regulator has been given a large amount of power to make executive decisions about which charities meet the public benefit test. In a sense, the intervention of the hon. Member for Isle of Wight (Mr. Turner) on the hon. Member for Cheltenham illustrated that point. The hon. Member for Cheltenham is right to say that what “unduly restrictive” would mean is not a decision for him, but it will be a decision for the Office of the Scottish Charity Regulator. Clearly, that important decision has been taken. That is an overall perspective of some of the differences between English and Scottish law, and the direction of travel of the Scottish situation.
The amendment is basically in two parts, the first of which deals with the public benefit test and provides that the benefits must outweigh the disbenefits. That is already established in law and does not add anything. As I understand it, a 1947 case concerning the National Anti-Vivisection Society, with which I have a passing familiarity, established that the benefits must outweigh the disbenefits as part of the public benefit test. Therefore, that part of the amendment is unnecessary.
The second part of the amendment contains the wording “unduly restrictive”. That wording is not clear enough for us to be confident that it would improve the public benefit test in the Bill and would not have unintended consequences. Could we be sure, in the context of the law in England and Wales, that existing charities, such as museums that charge fees, would not be caught? I am sure that that is not the intention of the framers of the amendment, including the hon. Member for Cheltenham, but we are not confident that it is the best way forward. At best it would mean no change to the public benefit test that is carried out by the commission; at worst, it could have harmful effects. Perhaps that is why Lord Phillips of Sudbury said, in a letter to me, that the Scottish provision is not well drafted. That is consistent with what he said in another place a year ago—the Liberal Democrat Front Benchers should hear this. He said:
“It was pressed upon me that it might assist our deliberations to introduce some of the Scottish wording around this very issue. However, I rejected that out of hand because in this instance I believe that the Scots have got it plumb wrong”.—[Official Report, House of Lords, 28 June 2005; Vol. 673, c. 168.]
Liberal Democrat Front-Benchers might need to consult with Lord Phillips on that, but on this occasion at least, we agree with him that the amendment would not be helpful. We have not closed our minds to the possibility of improving the Bill, but any change must meet the true criteria set out by my right hon. Friend the Chancellor of the Duchy of Lancaster: that it provides a sound legal basis for the public benefit test and avoids any unintended or harmful consequences. On the basis of those explanations, I hope that the hon. Gentleman will withdraw his amendment.

Martin Horwood: I shall take the second part of the amendment first regarding
“benefit to the natural environment, or the living species within it”.
I am encouraged by the sympathetic comments from the hon. Member for Bishop Auckland (Helen Goodman), the right hon. Member for Cardiff, South and Penarth, the Minister and others about the spirit of the amendment. There has been genuine concern about the risk of an organisation passing the clause 2(2) test as an environmental organisation, but going on to fail the public benefit test, because—I shall paraphrase the right hon. Member for Cardiff, South and Penarth—it might not always be possible to demonstrate public benefit when one cannot demonstrate a public who obviously and directly benefit. I am partly reassured by the Minister’s reply, but the risk still exists and there is still a need for clarity. Should the amendment be defeated, I invite the Minister to look sympathetically on the idea of introducing a Government amendment that might meet some of the same objectives. However, I advise him not to use “presumed”, as it is liable to misinterpretation.
The main body of the amendment is concerned with the Scottish public benefit test. The Minister suggested that four principles were being followed: first, that there is no free pass to pass the test, which is correct; secondly, that the Charity Commission has the final say; and thirdly, that the benefit is not automatically satisfied simply by the provision of education. I agree with those three principles, but there is doubt regarding the fourth—that the Bill will raise the bar. The legal opinion that I have heard is divided on whether the Bill will make any difference to charity law in terms of the public benefit test. The NCVO and the Charity Commission support that view in many of their comments.
The hon. Member for Isle of Wight questioned why the view of the Charity Commission, or the NCVO, or indeed the Liberal Democrats, since I have not reintroduced Lord Phillips’ amendment, might have evolved during the course of the long debate about this Bill. One obvious reason is the passage of the Scottish Act, because it sets a clear example of how a stricter set of guidelines on the public benefit test might work.
Let me answer a few of the hon. Gentleman’s questions about my amendment. He asked me to define or clarify what I meant by benefit or disbenefit. He kept on referring to them as my words, but they are the words adopted by the Scottish Parliament, so I can do no better than to refer to the Office of the Scottish Charity Regulator’s guidance on public benefit. It says:
“For example, if a charity relieves a person’s sickness or financial hardship, the person’s health or financial circumstances can be measurably improved. Such benefits could be described as tangible. On the other hand, intangible benefits may be more difficult to measure, but should still be identifiable. These can include, for example, many of the benefits of education or religion, or promoting appreciation of historic buildings. Both tangible and intangible benefits will be taken into account.”
I hope that reassures him, given some of his worries about whether the amendment would apply to the provision of education.
The hon. Gentleman also asked about the disbenefit. It, too, is explained more clearly in OSCR’s guidance, which says:
“Many of the everyday actions of organisations (and individuals) may cause a degree of harm to others, either directly or indirectly. This fact should not unnecessarily stifle the operations of charities. Where any disbenefit caused is due to reasonable and necessary actions in connection with the (prospective) charity’s purpose and is the inevitable and generally accepted result of such actions in the society in which they take place, then such disbenefit may be largely disregarded (for example, when a degree of harm to the public is caused (by road accidents and pollution) by charities that need to use cars in the delivery of services to their beneficiaries).”
Again, I hope that he is reassured that the emerging practice in Scotland is moderate and reasonable.
That is why I shall not withdraw the amendment but press it to a vote. I hope that the demonstration of the need for more clarity and a stricter public benefit test, which I think has been demonstrated, is reflected in the Bill.
The hon. Member for Rochford and Southend, East (James Duddridge) referred us to re Resch in the hope that it would provide clarity. My noble and learned Friend Lord Phillips of Sudbury is one of the few people who has probably read and understands re Resch and he said in the other place that
“A decent lawyer can make a good case for virtually any proposition on the basis of Re: Resch. If you have trouble sleeping, keep it by your bedside. I was amused that the briefing note that the Independent Schools Council sent to, I suspect, all of us, had the wonderful statement:
‘The Resch principles are in the law books for anyone to read’. 
Indeed they are. Read, and read, and read ye may, but a certain conclusion you will not find”.—[Official Report, House of Lords, 7 June 2006; Vol. 672, c. 794.]
The confusion about the interpretation of re Resch which has prompted much debate, especially in the other place, underlines the need for clarity.
It is absolutely right that institutions that gain the benefits of charitable status clearly demonstrate a public benefit, perhaps more so than they have had to do in the past. That is the whole tone and direction of the Bill, which seeks to apply a public benefit test to all charities. Even the hon. Member for Isle of Wight’s noble Friend said in another place that all charities, whatever their purpose, should have to pass a public benefit test. I am simply trying to ensure in the amendment that the public benefit test makes some difference to the existing law and that the sort of direction in which the Independent Schools Council is encouraging its members to travel—to seek out ways imaginatively to promote public benefit more effectively—is the direction in which they go. Only stricter wording in the Bill will deliver that.

Question put, That the amendment be made:—

The Committee divided: Ayes 2, Noes 12.

Question accordingly negatived.

Roger Gale: Before we proceed to the next group of amendments, it may be for the convenience of the Committee if I indicate now that it has always been my custom and practice to allow a stand part debate either at the beginning of consideration of a clause or at the end, but not both. I understand that there has been a fairly substantive debate already on the clause and, that being so, it is unlikely that I shall be minded to allow a stand part debate. Hon. Members may therefore choose to use their ingenuity to raise, within order, any other matters that may arise during the next few moments.

Andrew Turner: I beg to move amendment No. 4, in clauseÂ 3,Â pageÂ 3,Â lineÂ 22,Â after ‘not’, insert
‘save in the case of subsections (a) and (c) of section 2(2),’.

Roger Gale: With this it will be convenient to discuss amendment No. 54, in clauseÂ 3,Â pageÂ 3,Â lineÂ 22,Â after ‘not’, insert
‘save in the case of section 2(2)(b).

Andrew Turner: It is a great pleasure to serve under your chairmanship again, Mr. Gale.
Both of the amendments resist the abolition of the presumption of public benefit which seems to be at the heart of the Bill. Amendment No. 4 refers to clause 2(2)(a) and (c) and amendment No. 54 to clause 2(2)(b). The principle embodied in the Bill is very simple: it is that there should be a level playing field and all charities should have to demonstrate public benefit, albeit that that principle was somewhat undermined by the arguments advanced by the hon. Member for Cheltenham in support of amendment No. 71. What is interesting is that the public benefit test seems to be different for many of the causes set out in clause 2(2). My intention in tabling the amendments is twofold. First, it is to tease out what the law is on public benefit in respect of each of the three charitable purposes. Secondly, it is to test whether it is to the advantage of the populace in general that charities should have to devote time and energy to demonstrating public benefit when to do so is otiose, as in the case of the relief of poverty, or impossible, as in the case of the advancement of religion.
I am told that, under charity case law, it is not those who engage in religious practices who are the public who benefit; the public benefit is the benefit that they bring to society by rubbing shoulders with those who do not so engage. In other words, people who engage in religious practices are presumed to become more moral and altruistic as a result, so the public at large benefit when they mix with such people. That is an ingenious interpretation. However, the Chancellor of the Duchy of Lancaster has said that
“all charities will have to show that they are for the public benefit...an organisation will have to show that it generates identifiable benefits that reach...a sufficiently large section of the public.”—[Official Report, 26 June 2006; Vol. 448, c. 25.]
What are the identifiable benefits from religion that reach a sufficiently large section of the public? If it were a case of rubbing shoulders, many religions, but not all, will be able to demonstrate public benefit.
Perhaps prayer brings comfort to those who participate in it, but I am worried about how we can demonstrate that it generates a public benefit. I said that on Second Reading, but I do not think that I received a satisfactory reply. Can we demonstrate that the prayer undertaken by people engaged in religion has made them more moral and altruistic? Is that what religions will be asked to demonstrate?

Helen Goodman: The hon. Gentleman may be aware that, in America, an experiment was carried out in which religious communities prayed for people who were ill. The people involved did not know whether or not they were being prayed for but, as it happened, those who had been prayed for did get better faster.

Andrew Turner: That is most encouraging for those who occasionally pray and even more so for those who pray more frequently. The case seems to be very much on the lines of the arguments over health foods—we might be able to demonstrate the statistics, but can we demonstrate the cause and effect? Perhaps I should not go down this road—in fact, I know I should not. I shall do so at another opportunity, Mr. Gale.
The difficulty is demonstrating that the prayer has the effect that the hon. Lady mentioned. If we are providing a place of worship and some comfort is taken by the people who attend the place of worship, is that providing a public benefit in that the place of worship is open to a fair number of people, or are we providing a private benefit? Is it sufficient that that group of the public should take comfort from prayer or is there also a requirement that that comfort be extended to other people?
That sounds highly academic, but what about people in religious groups who pray but do not rub shoulders with others? The Parliamentary Secretary assured me on Second Reading that,
“for religion, the obligation will not be onerous...making provision for people to attend acts of worship is clearly a public benefit.”—[Official Report, 26 June 2006; Vol. 448, c. 96.]
I should have mentioned that point earlier, because it was part of my earlier argument.
What about those who pray behind closed doors? There is a current television programme about women attending a convent of the Poor Clares. Few people have the opportunity to attend such a convent temporarily, because the Poor Clares are a contemplative order that operates mostly behind closed doors. What is the benefit to the public of the activity of the Poor Clares and, more significantly, how do they demonstrate it to the satisfaction of the Charity Commission?

Alun Michael: Is not the hon. Gentleman in danger of taking us into a linguistic discussion when the answer is actually is given in clause 3? It says:
“In this Part any reference to the public benefit is a reference to the public benefit as that term is understood for the purposes of the law relating to charities in England and Wales.”
That refers specifically to what has built up in statute and case law over the years. The answer is already in law and the Bill ensures that it is enshrined and continued, which is better than having a fresh set of words putting it to one side.

Andrew Turner: I am grateful to the right hon. Gentleman for raising that point, because about three months ago that was the meaning that I understood was contained in the Bill. However, that interpretation has been sadly undermined, not least by the Parliamentary Secretary himself, who said that the Bill would
“raise the bar with regard to the contribution that”
private schools
“make towards the public benefit”.—[Official Report, 26 June 2006; Vol. 448, c. 97.]
He cannot say both, “This is the public benefit test and it is unchanged” and “We will use the processes in this Bill to raise the bar for the public benefit test.”

Alun Michael: Surely, that is precisely what it does. By removing the presumption that the general legal definition—that which is understood in common law—applies to schools and other organisations that were previously presumed to have a public benefit, the clause does precisely what he says it does not do.

Andrew Turner: If by “raise the bar”, the Parliamentary Secretary meant “remove the presumption of public benefit”—[Interruption.] He is saying that he did. That makes it a lot easier.
I am concerned that the Parliamentary Secretary has given the impression to certain hon. and right hon. Gentleman on the Government Back Benches that he will require independent schools to demonstrate a higher level of public benefit than they have been required to do so far. I understand that, currently, there is a presumption and an act by the Charity Commission would be required to overturn that, but the test is the same whether there is a presumption or not. Under the current law, once the Charity Commission tested whether a charity was meeting the public benefit test or the presumption was ill-founded, it would apply the same test once the presumption was removed. I hope that I am making this clear for the Parliamentary Secretary, because he may shake his head if I am not doing so.
The Parliamentary Secretary is not raising the test. He may be raising the bar and abolishing the presumption, but he is not making the test more difficult. I have to leave it to him, unless he wishes to intervene.

Tom Levitt: I am trying with interest to follow the hon. Gentleman’s argument. Surely a presumption is a presumption, beyond which there is no further need for a test. The Bill says that we need organisations to justify their charitable status. The hon. Gentleman appears to suggest that Eton, Harrow and all such schools should not have to demonstrate their public benefit, but organisations such as the National Society for the Prevention of Cruelty to Children should have to.

Andrew Turner: The selection of examples makes the hon. Gentleman’s point, and I am sure that that is why he selected them. However, I am afraid that he is wrong. A presumption is a merely a presumption: in the absence of other evidence, we presume that public benefit is met.
A presumption, however, is not an insurmountable assertion; otherwise, the Finsbury Park mosque would not have been required to take action to preserve its charitable status. That mosque benefited from the presumption that the advancement of religion is a charitable purpose. There were complaints about how the mosque was used and the Charity Commission waded in to persuade those who run the mosque to act differently and bar certain people from using it for certain purposes. There was a presumption, but it was not irrebuttable. Once the Charity Commission had found that the mosque was not being used for public benefit, it asked the trustees to change their behaviour. They did.
I am asking whether the test in clause 3(3), to which the right hon. Member for Cardiff, South and Penarth referred, will be the same or whether it is of a higher level, first in respect of religion, as the right hon. Gentleman says, secondly in respect of the alleviation of poverty, on which nobody has uttered, and thirdly in respect of the advancement of education. If the test is the same, we are fine and dandy. However, if it is different, the assertion that subsection (3) guarantees no change in the test is false. I had not intended to go down that avenue, although it would be useful to do so. I am sure that the Parliamentary Secretary will respond helpfully to that point.

James Duddridge: Does my hon. Friend agree that the issue relates not only to the position directly after the Bill is enacted? The test could be ratcheted up year after year, both by Government-appointed charity commissioners and political pressure, and that would effectively be an extra tax on independent schools.

Andrew Turner: That has certainly been a concern. I accept, of course, that, in the Bill, the Charity Commission is deemed to be independent, but Ministers make the appointments. When we come to clause 4, I intend to discuss the process through which the public benefit test may evolve; that is certainly a concern of mine.
I go back to my amendment. The second example referred to by amendment No. 4 is that of the alleviation of poverty. As I said on Second Reading, I find it difficult to understand how it can be argued with any reasonable likelihood of success that a charity for the relief of poverty is not for the public benefit. On Second Reading, the Parliamentary Secretary said that
“if we take the case of a trust to benefit a few people in one’s immediate family, one might say that it was set up for the relief of poverty. However, there might be questions about whether it genuinely provided public benefit.”—[Official Report, 26 June 2006; Vol. 448, c. 96.]
There is a presumption that there is public benefit, of course—but it is rebuttable. In the case under discussion, such use of a trust would be excluded, because it would be so defined that its membership would be fixed, which means that it would be a private trust, not a public trust. A private trust cannot be for public benefit.
I accept that there may be cases in which the presumption is unreasonable, but those are cases in which the presumption is rebuttable. I do not want every charity whose object is the relief of poverty having to go out and demonstrate that it is relieving poverty in the way the Charity Commission intends, and thereby expend a huge amount of time and energy. I do not see how the abolition of the presumption can have any effect unless charities are asked to demonstrate what Ministers say that they want them to demonstrate: identifiable benefits. So every religious or educational charity—not just Eton and Harrow, but the Isle of Wight Steam Railway, which is an educational charity—will be asked to spend time and money demonstrating how it provides public benefit, when the Isle of Wight Steam Railway would far rather build an extension to join the island line from Shanklin to Ryde pier head.

Martin Horwood: The hon. Gentleman seems to forget that the enormous majority of charities already have to demonstrate public benefit under current law, because the fourth head of charity requires it. Is he suggesting that the current requirement to prove public benefit is enormously onerous for all the thousands of charities that endure it?

Andrew Turner: I am not suggesting that. I simply do not know, but I do know that some charities have been caught, and I mentioned one earlier. I did not quote its name because the Charity Commission did not tell me the name, but I quoted the Charity Commission as saying that a particular charity that operates for the benefit of police officers’ widows and orphans was behaving inappropriately by giving them a Christmas gift of £50. I am quite happy to table the letter—or whatever one does with papers—so that hon. Members can read them.

Martin Horwood: Since that organisation did not make its gifts to the widows of police officers on the basis of need, it would not meet the criteria in the hon. Gentleman’s amendment, which excludes the prevention or relief of poverty, and the advancement of religion. It would still have to pass the public benefit test even if his amendment were passed.

Andrew Turner: The Charity Commission would have to put that test to the organisation to demonstrate, but the commission would not have to ask every charity to demonstrate it. Many charities will demonstrate it perfectly adequately, but we will be asking charities—and the Charity Commission, for that matter—to expend a lot of time, effort and money, and, in the case of the Charity Commission, our money and our constituents’ money, in demonstrating something that it is unnecessary to demonstrate unless there is a prima facie case that those organisations are not conferring public benefit.

Alun Michael: Does the hon. Gentleman not accept that any charity of any size produces a business plan—for its own internal reasons, never mind any external scrutiny—that demonstrates how it is pursuing its charitable objects and how it is therefore delivering public benefit? No extra work is required.

Andrew Turner: No, I do not accept that, any more than I accept that every business has a business plan. Perhaps they ought to have, but I am sure that not every Conservative association has a business plan. Mine does, as it happens, but I do not suppose that every constituency Labour party has a business plan. Of course, that is the way that things should be done in the best of all possible worlds, with an infinite number of staff who can spend their time on such matters, but charities are not like that. [Interruption.] I did not hear the right hon. Gentleman’s intervention.

Alun Michael: I said that charities are a lot more business-like than the hon. Gentleman thinks.

Andrew Turner: Many are, but not all are able to act in the way that the right hon. Gentleman describes, and I am concerned that they will be forced so to act. If I can find the example that I was given earlier—well, I cannot find it, but I am sure that I will have an opportunity to quote it later during the Bill’s proceedings. Anyway, I received an e-mail from someone who claimed to be a lifelong Labour voter. I know that lifelong Conservative voters are those who are not going to vote for me at the next election; the same probably applies to this lifelong Labour voter. He has taken on the treasuryship of his local church, but complains that, even in the present circumstances, the Charity Commission is expecting far too much, and he says that it is not surprising that one cannot find people who are willing to take on such responsibilities. Although I accept that the other charities whose purposes are in the list are required to demonstrate public benefit, it would be better if we did not impose that requirement on lots of new ones as well.

Tom Levitt: As one spent three very enjoyable summers on the Isle of Wight in my student days, I certainly take the hon. Gentleman’s point about the valuable work of the Isle of Wight Steam Railway Co.
However, I wish to comment on the point raised by my right hon. Friend the Member for Cardiff, South and Penarth about the onerous nature of demonstrating that a charity is doing what it was set up to do. If I were asked to give money to one of those charities, I would want to know that it was doing what it was set up to do; if I were a trustee, I would expect some sort of annual report from the chief executive or the chairman; if I were an auditor, I would expect the audited accounts of the organisation to demonstrate that the charitable purpose is being met. All those things should really be being done now. The Bill raises the threshold at which charities have to register and so reduces the burden on smaller charities, but the hon. Gentleman is making a mountain out of a molehill in suggesting that there is any significant extra work for charities to do under the clause.

Andrew Turner: I cannot judge the size of the mountain, but we should remember that those charities that do not have to register are still obliged to demonstrate public benefit. As for the small charities, if I give money to the Isle of Wight bat hospital, I know where that money is going, because I can go to that hospital and see the bats; the same is the case for the Isle of Wight Steam Railway Co. There is a difference between a small, local charity and a large charity that requires auditors, business plans and goodness knows what.
I remind the Committee what happens when a charity is not delivering public benefit; that is particularly significant to an educational charity. The document from which I quoted earlier, “Public Benefit—the Charity Commission’s approach”, sets out what happens then. It states:
“our action might include helping the charity change its stated purposes or its activities so that it is benefiting enough of the public to show public benefit”—
that is fine—
“We might also use our regulatory powers to enforce change if the trustees are not co-operating with us, although we anticipate we would need to do this in only in a few cases.”
That, too, is excellent.
“However, in extreme cases, where the trustees are co-operating with us but the organisation simply cannot in all the circumstances provide public benefit, our action might include removing the charity from the register and making a legal scheme where necessary to ensure that any charitable assets of the organisation will in the future be applied for other charitable purposes close to any purposes that have ceased to be charitable.”
That suggests that there are some activities that will cease to be deemed charitable, and that the charities concerned will therefore lose their assets. I am worried principally that the abolition of the presumption of public benefit will put an additional burden on charities and on the Charity Commission that they are ill placed to meet.

Martin Horwood: I would like to draw a little on my experience of being on the senior management team of a national charity that had to pass the public benefit test. The Alzheimer’s Society did not qualify under any of the first three heads of charitable purposes. The hon. Member for Isle of Wight seems to think that passing the public benefit test and maintaining the status of passing the public benefit test is some terribly onerous and difficult responsibility that involves lawyers’ fees and heaven knows what else. However, I have to say that in five years on that senior management team, the public benefit test did not bother us for one minute.
I am speaking about a charity that did not provide a benefit to the whole public. We were quite shamelessly restricting our services for the benefit of carers and people with dementia, so there is perhaps a case to be made that we were not providing a wider public benefit and that we restricted our services. However, most of us thought that if we had ever been challenged as to whether we were providing a public benefit, we could have dispatched the argument on one side of A4 faxed to the Charity Commission, which I suspect would not have wasted any more time on it than we would have done.
In the overwhelming majority of cases, charities will have little difficulty in passing the public benefit test or proving that they are capable of passing it, should they ever be challenged. I echo the words of the hon. Member for the Member for High Peak (Tom Levitt) when he says that a mountain is being made out of a molehill.
In the specific case of religion, the hon. Member for Isle of Wight seems to be concerned that it is difficult to demonstrate the benefit of prayer or religious activity. Through a precedent in case law, which I do not pretend to fully understand, even religious charities have to demonstrate some public benefit. It is probably because of the need to demonstrate that they are advancing religion as opposed to just practising it. For example, closed orders—I do not know whether the Poor Clares fall into that category, but I suspect that they do—do not now qualify as charitable organisations in charity law because they are practising religion behind closed doors for their own personal benefit. Therefore, that restriction already provides.
It is not beyond the hon. Gentleman’s faculties to demonstrate the benefit of prayer or religion in a wider sense. It could be argued that advancing religion for the general public might allow some members of the public to believe that they were gaining greater insight into the truth of life, the universe and everything; or that it might bring them greater comfort; or that it might even help them to recover from illness. It could be argued that encouraging them to perform an act of contemplation or meditation might bring peace of mind by the very process that they were going through. It does not seem difficult to demonstrate that religious charities could pass the public benefit test that is in the Bill.
I have some sympathy with the question that the hon. Gentleman put to the Government. Given the failure of my earlier amendment, we now have a public benefit test that advances little from existing charity law. However, for exactly that reason, given that most charities have no difficulty passing the test under existing charity law, they would have little difficulty in passing it under the Bill.
The test is designed to catch charities that are scams, in which there is obvious possibility of abuse or of the misleading or corruption of individuals by the organisation. Those kinds of organisations were failing the public benefit test before. On that front, the hon. Gentleman’s amendment poses a practical risk. He is taking the principles from previous Acts and applying them to a new Bill, which might have unintended consequences. By putting in a deliberate statement that there will be a presumption that religious charities will satisfy the public benefit test, he may bring in religious organisations that are incontestably religious—whether or not they believe in a supernatural principle, or one god or many—but that would not have passed a more general public benefit test.
I am sure that we can all think of the most extreme examples, such as the Aum cult who gassed the Tokyo underground, the Branch Davidian sect who committed mass suicide in Guyana many years ago, or Satanists who would presumably regard themselves as religious. Under that blanket presumption, which enables them to evade any further public benefit test, those type of organisations might seek to claim charitable status. That is an extreme and absurd version of the argument but there is a risk that there may be unintended consequences to his amendment that he has not considered.
On the general principle of the amendment, the hon. Gentleman’s arguments are simply wrong. One of the Bill’s great attractions is that it seeks to modernise the structure of charity law. It will remove the antiquated and almost stereotypical preference for the relief of poverty and the advancement of religion and education as charitable objects that are somehow proper, with everything else having to pass a second test. I thought that equalisation and levelling the playing field among all charities enjoyed enormously wide support in the sector. I am aware of no significant opposition even from religious charities, and the provision has been supported even by the hon. Gentleman’s noble Friends in another place. I repeat the words of Lord Hodgson of Astley Abbots on 28 June. He said that all charities should
“have to meet a public benefit test, no matter what their purposes are”.—[Official Report, House of Lords, 28 June 2005; Vol. 673, c. 154.]
The hon. Gentleman is arguing that particular categories of charity, including private schools such as Eton, Harrow and Winchester, should be put back in a privileged position. The list of charities that he would relegate to a secondary position is quite impressive. The RSPCA, the Dogs Trust, the Shakespeare Globe Trust, the Dartington Hall Trust, Help the Aged, Age Concern, Youth Music, the Royal Society for the Protection of birds, Alcohol Concern and even the Police Dependants Trust about which he spoke earlier would all be relegated to that secondary status. That is quite wrong in principle.
One of the best things about the Bill and the reason why it has commanded such wide support in the voluntary sector is that it moves away from that slightly mediaeval approach toward a level playing field for all charities in a modern context. I shall oppose the hon. Gentleman’s amendment if he presses it to a Division.

Edward Miliband: We have had a most illuminating debate, I think. The starting point is whether we agree with the overall principle that all charities, in return for receipt of public money, should have to show public benefit. The Government and the Liberal Democrat Front Benchers agree with that principle, but I am sad to say that the Conservative Front-Bench spokesman does not appear to do so.

James Duddridge: On a point of clarification, what exactly does the Minister mean by receiving public money? Does he mean receiving it by not being taxed? That is somewhat different—a flow of funds in the opposite direction. That is fundamental.

Edward Miliband: The hon. Gentleman can dance on the head of a pin if he likes, but there is a significant cost to the public purse as a result of charities’ preferential tax status. It is clearly a cost, and in my view such preferential treatment relative to other organisations must therefore be justified. That is obvious.

Robert Flello: On a minor point, does my hon. Friend agree that the label “charity” also makes the public more willing to donate money than the label “not-for-profit organisation” might?

Edward Miliband: My hon. Friend makes an important point. Part of the Bill is about ensuring public confidence in the charitable brand. We cannot say that the public should have confidence in the charitable brand if a whole set of classes of charity is presumed not to have to show public benefit. That is the existing law.
The hon. Member for Isle of Wight asked about the nature of the test. That will be determined on the basis of common law, but it is clear that at the moment, various charities are essentially not scrutinised because of that presumption. That is how it works in practice. The Government think that that is wrong. We think that the RSPCA, Eton college and a religious charity should all provide proof of public benefit.

Angela Watkinson: The Parliamentary Secretary might have received correspondence from various religious organisations on the subject. The Christian Institute expressed concern that the removal of presumption on the public benefit of religious organisations will give the commission
“greatly increased powers to reject the applications of religious bodies or even to de-register existing ones”.
Will the Minister reassure the Committee that the stringency of tests will not be greatly increased?

Edward Miliband: There is a difference. A test will be applied in practice that is not currently applied. The hon. Member for Isle of Wight quoted my point on Second Reading that it is clearly established in common law that the practice of religion and religious organisations is seen as providing a benefit to the public. It will be for the Charity Commission to make the final decision, and I cannot speak for it. That is a commonly accepted principle. It is clear that religious charities and organisations provide public benefit, and I see no reason why that should change. The hon. Lady can therefore reassure religious organisations.

Angela Watkinson: I am not absolutely certain about the status of the commission’s position paper, “Public Benefit—the Charity Commission’s Approach” or about the relationship between that paper and the Bill. Religious organisations believe that the commission will distinguish between acts of worship and services in a public place and other forms of religious practice such as, for example, missionary work and the alpha course. Will the commission distinguish between acts of worship and services and other forms of religious practice? There is a concern that if public worship is not included, religious organisations might encounter difficulties under the Bill.

Edward Miliband: Reassurance can be offered on the point about missionary work, which has been raised before.
Let me return to the argument. There will be a public benefit test for every charity, and that is right. There is a specific issue about fee-charging charities, because they have to show that they provide benefit to a sufficient section of the population, and it will be for the commission to implement the provision in practice. My concern about the hon. Gentleman’s amendment is that, essentially, he seeks to provide a free pass to certain charities. His concern is probably motivated by independent schools, but the Conservative party is on its own not only in this Committee but in relation to independent schools. They welcome the Bill and say that it is the right thing to do.
I have a letter from Jonathan Shephard, head of the Independent Schools Council, to my right hon. Friend the Chancellor of the Duchy of Lancaster. It is important for the Committee to hear it. He says:
“Presumption of public benefit will be removed. This is of prime importance. Until now, the presumption has been that a body established for charitable purposes (including education) is charitable. This is (broadly) irrespective of performance. Now that the presumption is being removed, there will be no place for the lazy charity.”
Mr. Shephard goes on to say that in evidence to the Joint Committee, chaired by my right hon. Friend the Member for Darlington (Mr. Milburn), he referred to the fact that some charities needed to pull their socks up. He said that they will now have to do so, because of the removal of presumption, and the likely annual audit and return of public benefit that they will be required to provide.
I agree with Mr. Jonathan Shephard. Many private schools do incredibly good work with the state sector, but as he said to me, we aspire to ensure that as many schools as possible rise to the standards of the best in co-operation with the state sector. We are trying to break down the divide between private and state schools. That is important, and I would have thought that the Conservative party would welcome it. The Bill, by removing the presumption, will help to ensure that it happens. Mr. Jonathan Shephard of the Independent Schools Council, which represents the private schools, after all, agrees. He thinks it is a good idea. In fact, he has said that it is a very good Bill, so I cannot for the life of me see why the hon. Gentleman is worried. There will be a test, and the bar will be raised, because the test was not being implemented in practice before.

Andrew Turner: The Minister has now said something illuminating—not that most of what he says is not illuminating. He says, “because the test was not being applied properly before”.

Edward Miliband: I said “implemented”.

Andrew Turner: I am sorry. The Minister used similar words. If that is what he is asserting, we are beginning to understand his point, but if the test was not being applied properly by the Charity Commission when it had only to look at cases that were brought to it, how on earth will it be applied properly to every charity in all three categories when it has to go systematically through every charity? Is the Minister saying that it was pure luck that the Charity Commission found the Finsbury Park mosque, applied the test and found that it failed?

Edward Miliband: The hon. Gentleman is bringing up all kinds of different issues. The Finsbury Park case was not about public benefit but we should not go down the Finsbury Park road because it will confuse an already somewhat confused picture.
My point is simple: at present there is a presumption of public benefit for educational, religious and anti-poverty charities. As I said on Second Reading, that presumption has, in effect, meant a free pass for charities in those categories. There should not be one law for one set of charities and another law for another set. It is right that every one should have to pass a public benefit test and that is what will happen. There is no great revelation in what I have said; it will be for the Charity Commission to implement that test and we will discuss in clause 4 how that will be done.
The hon. Member for Upminster referred to the illustrative material for this Bill that was published by the Charity Commission. When the Bill is enacted, it will publish general draft guidance for consultation with stakeholders, individuals and the public and that is the right way to go. It will then consider specific groups of charities and it will be for the Charity Commission and the chief charity commissioner to implement the proposal in practice, which is right. It is not for politicians to do so.
Several questions were asked about the precise test of public benefit and they are very legitimate questions. If my answers have been somewhat inadequate on the matter of the specific test for individual charities, it is because there is a body of case law that has been built up over time. On the advice of the National Council for Voluntary Organisations and other major charities, we made a decision on public benefit to stick with a flexible definition that was defined in common law.
That does not make things simple; it makes them incredibly complicated, especially for people who are not lawyers. We could have said, “For every charity and for every possible purpose, we politicians will provide a public benefit test,” but that would not have been the right way to proceed. However, the implications are that we have to rely on the wisdom of the courts and the Charity Commission. When enacted, the Bill will be implemented on the basis of the established body of law.
The amendment is misconceived. It troubles me, because it puts the hon. Member for Isle of Wight and the Conservative party outside the mainstream of opinion on the matter. I still do not fully understand the motivation behind the amendment; it is right that all charities should have to pass the public benefit test and I urge the hon. Gentleman to ask leave to withdraw the amendment.

Andrew Turner: I am grateful to the Minister for the way in which he has responded to the amendment. The motivation is to scrutinise the consequences of the Bill. I am by nature someone who is concerned when everyone agrees because it may mean that we have scrutinised the proposal insufficiently.
I am particularly concerned about the imposition of an additional responsibility on small charities. I originally intended to table one amendment that would have overturned the abolition of the presumption in all three cases. As a result of what Ministers said on Second Reading, I decided to table two separate amendments because if the independent schools think that it is all right, I see little point in arguing on their behalf that it is all wrong. However, I have certain concerns about the position of Mr. Jonathan Shephard and the independent schools, to which I shall return.
As my hon. Friend the Member for Upminster has suggested, I am concerned that the consequence of the abolition of the public benefit would be onerous and would establish a higher level of test. The Minister has persuaded me that it will not establish a higher level of test in the cases of the abolition of poverty and the advancement of religion.
The reasons why people are concerned are set out, as my hon. Friend mentioned, quite well in the Christian Institute paper. It stated:
“’‘Public Benefit - the Charity Commission’s approach’ is very secular in tone. It states that that public benefit must be assessed ‘in the light of modern conditions’ and that keeping up with ‘modern society’ is required if a charity is not to have its charitable status revoked.”
It was noted that that is contained in paragraphs 15, 23 and 24 of the Charity Commission document.
In the nature of things, some people who are religious think that there is something wrong in modern society and that not everything is right about it, and they point out that major religions are not modern and that one cannot interpret belief in the light of modern society. Plenty of people will do that, some of whom are in the Episcopal Church in the United States of America, but others do not, some of whom are in the Anglican Church in Nigeria. Without going too far down that road, such people are concerned that they will be told to modernise in order to comply with the new thinking of the Charity Commission. The Minister has gone some way towards setting my mind at rest.

Edward Miliband: The Charity Commission has had a rough time today. There is no sense in its guidance that modernisation means somehow abandoning the religious principles that these organisations rightly want to uphold. In fact, my hon. Friend the Member for High Peak made the point that, hundreds of years ago, such provisions might have been applied only to Christian organisations. Now, we are talking about a wider set of religious purposes. That is what modernisation surely means in this context.

Andrew Turner: We may find that modernisation involves some of the religions to which the hon. Member for Cheltenham rightly referred disparagingly, so I hope it does not. I accept what the Minister is saying, but I hope that he will accept that the reason for scrutinising these passages with care is because we need to understand the consequences of invoking them.
I hope the Minister will also accept that although the cost to the public purse, by his definition, of the independent schools is about £100 million, they put considerable additional money back into society in the form of scholarships and so on. I am sure that he will accept that. Although the overall cost of charities to the public purse is in excess of £2.8 billion, there is a value of what charities do in return for it. Perhaps it is a value that has not been quantified; perhaps it is impossible to quantify. In talking as I think the hon. Member for High Peak did about the cost to the public purse of charities, we should recognise, as I know the Minister does, that there is a benefit to the public purse of charities as well.
I am not arguing for a free pass to charitable status for charities; I am arguing that it is a more efficient way of regulating—it might be more efficient in the case of all charities, but this is the position we are discussing—to have a system whereby a charity that fulfils the basic qualifications can be deemed charitable unless someone says, “Look here, that organisation is not doing its job properly” than to have one where charities have go through certain hoops before they are allowed to become a charity.

Martin Horwood: The hon. Gentleman must realise that efficiency is not the only issue at stake. A private preparatory school in my constituency without great grounds or theatre facilities struggled to think how it might pass a future public benefit test, and it decided to share one of its music teachers with local state schools. That was a laudable response, but that step is being taken only as a result of the possibility of a public benefit test. Can the hon. Gentleman possibly be arguing against that?

Andrew Turner: I happen to think that education is a public good. It does not matter that I benefit from the education, because the world benefits from my being better educated. In fact, it would probably benefit if I were better educated. The Chancellor of the Exchequer says that education is a public good: that is the argument he puts forward for taxing us to put money into schools. That is the argument advanced by the Make Poverty History lobby for paying for more people to be educated in the developing world. Education is a public good, and that is a benefit. I accept and am glad that the school that the hon. Gentleman mentioned is doing something rather more useful than building rowing trenches near Slough to demonstrate public benefit. It is important that children are educated. It does not matter if some can afford a better education for their children than others; it is good that they are educated.

Edward Miliband: I fear that, although he is trying to close the divisions, the hon. Gentleman is opening them up. Mr. Jonathan Shephard says that the indirect benefit that private schools provide in relief to the public purse is not enough, in his view, to justify their charitable status. That suggests that education on its own is not enough; in his view there needs to be co-operation. Does the hon. Gentleman disagree?

Andrew Turner: I did not think that that was what Mr. Shephard was asserting. I thought that he was saying that there should be additional benefit, not that education was an indirect benefit. I think that that is so, although I cannot speak for him. My view is that it is beneficial if more people are better educated. That should be enough to justify an educational organisation being charitable.

Edward Miliband: No doubt Jonathan Shephard will be pleased about his role in this Committee. The question and answer document issued to Members of Parliament by independent schools asks,
“Is indirect public benefit through savings to the taxpayer enough to meet public benefit requirements?”
The answer is:
“Indirect public benefit is not enough on its own to ensure charitable status. There are many reasons...which support the charitable status of independent schools, of which indirect public benefit, though a very large benefit, is only one. Savings to the taxpayer, however large, will not be enough on their own to make a school (or hospital, or retirement home) charitable.”
That is Jonathan Shephard’s view and that of the Independent Schools Council.

Andrew Turner: I am sorry; I misunderstood the Parliamentary Secretary. That is Mr. Shephard’s view. However, we are not talking about the indirect benefit of savings to the taxpayer, but the direct benefit to the public of more people being better educated. That is the benefit.

Tom Levitt: Will the hon. Gentleman give way?

Andrew Turner: If the hon. Gentleman really thinks that it is worth it.

Tom Levitt: If he is arguing that all education, however or wherever it is delivered and whoever it is delivered by, is by definition a public benefit, notwithstanding how restrictive it is regarding the number of people who can engage in it, would he say that state schools should have charitable status? Should a company providing supply teachers, or individuals who set themselves up as private piano teachers, have charitable status? If he is saying that education must always in every context have charitable status, he will make spending commitments for a future Government that will be impossible to keep.

Andrew Turner: Many state schools have charitable status. For example, all grant-maintained schools were exempt charities. I do not know whether the same is true of foundation schools, but I suspect that that is so. My argument is that education is a public good, and that is generally accepted. I was not asserting that, just because someone says that they are educating, there should be the irrebuttable presumption that it is charitable. It is the rebuttable presumption that matters.
We are at the end of a useful and interesting debate—at least, it was interesting to me—and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 ordered to stand part of the Bill.

Clause 4

Guidance as to operation of public benefit requirement

Question proposed, That the clause stand part of the Bill.

Andrew Turner: This will be short.

Edward Miliband: Promises, promises.

Andrew Turner: Well, my contribution will be. Some months ago, members of the Bill team at the Home Office gave me the benefit of their advice on the process in respect of the guidance on the operation of the public benefit requirement. I should like to read out my understanding of what that is and ask the Minister whether I have it right.
An organisation can become a charity if it comes under one of the charitable purposes listed under clause 2(2) and meets the public benefit test. Despite the desires of the hon. Member for Cheltenham (Martin Horwood), there is no presumption that any purpose is for the public benefit. Public benefit will not have a statutory definition and will continue to be interpreted according to case law.
The Charity Commission must issue guidance on the meaning of public benefit, and that will be updated when necessary. That guidance is not legally binding; I understand “guidance” to mean that charities must have regard to it and take account of it when deciding what they will do, but that they are not obliged blindly to follow it.
The commission’s objective is to promote awareness and understanding of the operation of the requirement that a charity must be for the public benefit. Before the commission issues guidance, it must undertake a consultation process. Charity trustees must have regard to any guidance published by the commission when they make decisions to ensure that their activities remain for the public benefit.
On 9 February 2005, Baroness Scotland told the Grand Committee in another place that the commission
“will have to explain in its guidance what the public benefit requirement is—in other words, the nature and meaning of the requirement...it will have to explain in its guidance how it proposes to operate or apply the requirement in practice to charities of various types and characteristics...it will have to carry out the public and other consultation mentioned in Clause 4”—
she omitted to say that it would presumably have to take account of the response to the consultation—
“Fourthly, it will have to disseminate the guidance”—[Official Report, House of Lords, 9 February 2005; Vol. 669, c. 103.]
I have put my point in those terms because I find it difficult to describe the process off the cuff. Does the Minister think that I have it right, and does that include a change to the public benefit test, as set out in clause 3(3)?

Edward Miliband: My understanding is that the hon. Gentleman is right. If his information came from formerly Home Office, now office of the third sector, officials, I am sure that it is right. [Interruption.] The letter did not come from them. Nevertheless, the hon. Gentleman’s description of the process is broadly right.
The clause gives the commission a duty to carry out whatever public and other consultation it thinks appropriate before issuing the guidance. My understanding is that the commission is very keen to provoke widespread public discussion about the nature of public benefit in general and how it will be applied. That is a good idea.
A number of hon. Members, including my right hon. Friend the Member for Cardiff, South and Penarth, emphasised on Second Reading that they expected the commission to take into account views expressed in Parliament about how it should approach the whole process. I agree with that too.
The commission has published its illustrative guidance; we can expect that only to be illustrative before the Bill becomes law because, as the hon. Gentleman emphasised, the process is new for the commission, and it is important that it undertakes it well and properly. In the guidance, the commission says that it will interpret the public benefit requirement in the light of three criteria: case law, modern conditions and the removal of the presumption of public benefit. It says that after the Bill is enacted, it will issue a new version of the guidance as an exposure draft for public consultation. Having published that overall guidance, it will, as I said, look at specific areas. It is for the commission and the chief commissioner to move forward on that basis. I hope that that is helpful for the hon. Gentleman.

Andrew Turner: That is indeed helpful. I should also acknowledge that my research assistant wrote the letter, not the Home Office.

Edward Miliband: On that basis, I propose that the clause stand part of the Bill.

Peter Bottomley: First, I apologise for not being here earlier, but I have just come back from a meeting of the Organisation for Security and Co-operation in Europe in Brussels, and the train was delayed. I am especially sorry to have missed the consideration of clause 2, which links to this clause.
Clause 4 is about guidance on the public benefit requirement. There have been several recent communications from Churches Together in Britain and Ireland asking what guidance will be given on the public benefit test for religion when the presumption that religion is a public benefit goes. I am not suggesting that the Minister can necessarily give a full and detailed answer about what the Charity Commission will put in its guidance, but he should offer to go into rather more detail either now or on Report.
First, the Minister should say how the Charity Commission will be expected to deal with non-religions, such as the British Humanist Association, which might carry out some of the functions normally carried out by churches or faiths, but which, by definition, are clearly not religions. Secondly, he might wish to liaise with the Charity Commission—the body to which the clause relates—to put together detailed considerations on how the commission will respond to Churches Together in Britain and Ireland and other organisations, including parts of the Muslim Council of Britain, which have made representations. He and the Charity Commission might have had time to consider them, but if they have not, it is important that they make it clear that there is no intention of excluding one of the great faiths of the world, Islam, from providing the public benefit that it clearly does.
I do not want to get on a late debating train on the issue of education, but most of us who support arts organisations—whether performing arts or others—think that, as long as it is not for profit, the question of art not being a public benefit is not a problem. Quoting too much from the Independent Schools Information Service on the question of whether education is a public benefit puts weight where it should not be. The Charity Commission should be able to say that education is of direct benefit and, if and when the direct benefit is not sufficient, it should specify when an indirect benefit would be needed as well.

Roger Gale: Order. The hon. Gentleman places me in a slightly difficult position. I fully appreciate, as does the House, that hon. Members have duties in other places, but the hon. Gentleman will find that much of what he has just raised was covered in earlier debates, and it might be to his advantage to study Hansard and then return to the issue. I am not seeking to curtail the debate, and if the Minister wishes to respond briefly to the points that have been raised in the spirit in which they have been raised, he may of course do so. Strictly speaking, however, they fall outwith the scope of the clause stand part debate.

Edward Miliband: I have great respect for the hon. Member for Worthing, West (Peter Bottomley), so I will definitely respond.
Let me briefly cover the hon. Gentleman’s point about religion and the public benefit test. He is completely right that religious organisations need to be given reassurance and confidence that those that have charitable status will continue to enjoy it and that the Bill does not affect their status. We can give them that assurance in broad terms. The hon. Gentleman’s comments about the handling of specific religious organisations will also have been heard by the Charity Commission.

Peter Bottomley: I understand your remarks, Mr. Gale, and I shall not try to detain the Committee. In the early part of my speech, however, I asked whether the Minister would consider whether services that were offered by an openly non-religious body and which were often also provided by faiths could be regarded as charitable. That is not a test question or a trick question, but a serious issue, which deserves some thought.
To respond to the Minister’s kind remarks, let me add that he might want to consider between now and Report whether relying on Charity Commission guidance is sufficient to deal with the point that I raised. Giving an assurance is one thing but, if it were not given in clear guidance by the Charity Commission and it is not in the primary legislation, there will still be apprehension.

Roger Gale: Clearly, the Minister has heard what the hon. Gentleman has said.

Question accordingly agreed to.

Clause 4 ordered to stand part of the Bill.

Clause 5

Special provisions about recreational charities, sports clubs etc.

Question proposed, That the clause stand part of the Bill.

Andrew Turner: The hon. Member for Bishop Auckland referred to the clause some moments ago. My worry, which arose before she raised that matter, is that a
“registered sports club established for charitable purposes is to be treated as not being so established, and accordingly cannot be a charity.”
I understand, of course, that, if the club were registered under the Recreational Charities Act 1958, certain provisions would apply to it, but if a club—as is now possible and has been so in the past—becomes a charity by virtue of its sporting activity and then becomes a registered sports club, what is the position of its assets? When an organisation ceases to be a charity, it loses its assets. What will be the consequences of that treatment of a sports club that is a charity, but which then chooses to register under the provision?

Lynda Waltho: I draw attention to subsection (3) because I am particularly worried about the proposal to omit miners welfare trusts from the special provisions category. I am sure that right hon. and hon. Members have experience of such trusts. I have a miners welfare association in my constituency. The Beech Tree Miners Welfare Association in Wollescote provides great assistance to miners, ex-miners, their families and widows. It assists with matters like aids and adaptations. It is its centre of the community. Most community events take place there, such as family weddings. It is a polling station. It runs youth clubs and has all sorts of recreational facilities for the whole community. It is most definitely of great benefit to the community, so I am greatly worried that it is to be omitted. Will my hon. Friend the Parliamentary Secretary reconsider the special provision to ascertain whether it is necessary to omit miners welfare association charities?

Peter Bottomley: Before the Minister responds, I wish to say that the notes on the clauses do not make clause 5 clear. I was not sure whether to read subsection (3), under which miners’ welfare trusts are omitted, without submitting it as an exception to the change that the clause makes or whether in light of the fact that they will cease to be charities. My guess is that it is the first assumption rather than my second, but no doubt the hon. Gentleman will be able to the help the Committee about that.
Subsection (4) states:
“A registered sports club established for charitable purposes is to be treated as not being so established, and accordingly cannot be a charity.”
If a club had charitable status, should not the clause read “ceases to be a charity”? If so, what will happen to the assets or does that apply only to those charities and clubs that purport to be registered after the Bill becomes an Act?
Let us consider an organisation that is not a club, such as the British Olympic Association. Is that charitable? If so, how do we know whether it is covered under the Bill?

Edward Miliband: It is a great joy to respond on the clause, which is a bit of a rag-bag, sweeping up matter on part 1. I shall really excite the Opposition by saying that part of the clause is motivated by a desire to be compatible with the European convention on human rights. I thought that that would cause some gasps. Let me explain what the clause does, because as the hon. Member for Worthing, West said, it is not clear.
The first part of the clause, up to the end of subsection (2)(b), deals with the problem that the Recreational Charities Act 1958 makes it charitable in certain circumstances to provide recreational leisure time facilities either for the public as a whole, or for women only, but not for men only. That element of discrimination arguably makes the Act incompatible with the ECHR. Subsection (2) therefore makes it charitable to provide recreational leisure time facilities for men only as well as for women only, or for the public as a whole. The only alternative to that would have been to rule out women-only charities, which we feared could adversely affect women’s institutes, among others. In order to comply with the principle of non-discrimination, we have allowed for men-only charities. We know better than to take on the WI.

James Duddridge: A bright future.

Edward Miliband: Indeed. Subsection (3) deals with miners welfare trusts. I note the concerns of my hon. Friend the Member for Stourbridge (Lynda Waltho) on this issue, and I promise that I will report back on this matter on Report, and that I will make further inquiries into it. The provision is being repealed because it is also seen as being incompatible with the ECHR, because it discriminates in favour of a certain occupation as against members of other trades or professions.
Before members of the Committee become alarmed, I should point out that there has been extensive consultation with the Coal Industry Social Welfare Organisation on this issue to find a way to enable the 330 miners welfare trusts to continue their good work. As the consultation took place before I became a Minister, I shall meet representatives from CISWO and other miners welfare trusts. We will do further research on the position of such trusts, and I will report back, as my hon. Friend asks, on Report. Miners welfare trusts that allow entry to people other than miners will not be affected and will continue to qualify. I think that in practice—I have to be careful what I say here—other organisations should also qualify as having charitable purposes with little effort, but we need to research that. Further work must be done, and I will report back.
The final part of the clause deals with sports clubs. Subsections (4) and (5) prevent a sports club that is registered as a community amateur sports club, or CASC, from also being a charity. That is because CASC status and charitable status are meant to be separate options for small, community-based sports clubs, because there are different tax and regulatory regimes for CASC organisations. We certainly do not want to get rid of CASC status, because it has been widely welcomed in the amateur sports club community. Given the different tax and regulatory regimes, clubs could not be covered by both the CASC and charities regimes. Hence, the slight ugliness of this part of the clause.
As to what happens to organisations that might transition from one to another, my understanding is that it will continue to be possible for a CASC to move to charitable status and vice versa, which is exceptional in charity law. I hope that that reassures the Conservative spokesman and the hon. Member for Worthing, West.

Peter Bottomley: This is a serious issue and it is useful for the Committee to hear the background to the sports club change. Incidentally, I am sure that the Committee will welcome what the Parliamentary Secretary, Cabinet Office said about the miners trust, but he may want to get his experts to look at organisations that are not clubs and do not have premises, such as associations of people who have retired from work in the Royal Mail, local government, national civil service and so on. I suspect that there is no problem because the provision may be tied to property, but if I am wrong the Minister may want to help the House with a statement or some words on Report.
On community sports clubs, if they started as a charity and had it written into their articles that if they ceased to be a charity they would be required to yield up their assets to another organisation, they might be involved in turning into a completely new organisation with extra costs as a result of this legislative change. If the Parliamentary Secretary has time, it would be worth him double checking that he will not force innocent bodies into paying a lot of money to lawyers to go through a change of form. If that can happen automatically, the Committee and, later, the House will accept what he said, but it might be worth double checking that to be sure.
The Minister may also want to clarify the position of recreational charities with premises and those who provide activities that may not take place on their own premises. I have no doubt that in tax law the community sports facility concession is equivalent to that available to charities with perhaps some change on VAT. He may want to check that it is not tied to premises and that others will not be caught unnecessarily. I am not accusing him of being malevolent, but the matter is tricky and words of assurance do not work if all the possibilities and circumstances of those involved have not been checked.

Roger Gale: Hansard may record that that was an intervention and not a speech. At this stage, I admonish all hon. Members to keep interventions relatively brief.

Edward Miliband: Thank you, Mr. Gale. The hon. Gentleman obviously knows far more than I do about community amateur sports clubs, which play an important role. My understanding is that if a charity wants to become a CASC, it can start a new CASC and pass its assets over. The new CASC would then have charitable purposes without being a charity but would have all the benefits of charitable status.

Peter Bottomley: This will be brief. Unless there is a provision in the legislation dealing with CASCs that allows a charity to pass its assets to an organisation that is not a charity, the Minister may be providing more reassurance than the legislation provides. It would be helpful if he could clear up the matter—if not today, then soon.

Edward Miliband: I certainly do not want to go any further in trying to clear it up today. I will return to the matter on Report to clarify the precise position relating to the transitional issue between CASCs and charities that are sports clubs.

Question put and agreed to.

Clause 5 ordered to stand part of the Bill.

Clause 6

The Charity Commission

Andrew Turner: Hon. Members may have observed that amendment No. 5, which I thought was a jolly good amendment, was not selected for debate.

Roger Gale: Order. I am absolutely certain that the hon. Gentleman is not going to challenge the Chair’s selection. The sad fact is that, whether he likes it or not, amendment No. 5 was defective, which is why it was not selected.

Andrew Turner: I was about to confess as much, Mr. Gale. It was defective. None the less, this is the clause on which we debate the accountability of the Charity Commission. On Second Reading, the Parliamentary Secretary, kindly said:
“Labour Members are sympathetic to the notion that there needs to be rigorous Select Committee scrutiny of the work of the Charity Commission. The Home Affairs Committee has a lot on its plate.”—[Official Report, 26 June 2006; Vol. 448, c. 98.]
The hon. Member for Ealing, North (Stephen Pound) then intervened and took him down a completely different avenue, so the Parliamentary Secretary was unable to say what I anticipated: that he accepted that it was a jolly good suggestion, and that he would incorporate it into the Bill forthwith, by means of an amendment of his own. He did not have the opportunity to do that, but I give him that opportunity now.
A number of representations have been made that there should be parliamentary scrutiny of the Charity Commission. The Joint Committee said, at paragraph 181:
“The other side of independence from Government is that the Commission should be accountable to Parliament. We were concerned that more needs to be done in this regard. There seems to us to be an ‘accountability gap’.’
Paragraph 186 went on to
“recommend that the Home Affairs Select Committee have an annual evidence session with the Charity Commission.”
The Joint Committee made further recommendations, too. I support that recommendation; indeed, I went slightly further, and proposed specifically—

Edward Miliband: Ineffectively.

Andrew Turner: Specifically, but ineffectively, that the commission should be accountable to a Select Committee. That was out of regard for the fact that, as far as I know, there is no Committee responsible for the activities of the Chancellor of the Duchy of Lancaster, so I did not know where to put that responsibility.
Nevertheless, I have experience of the Education and Skills Committee, to which a similar non-ministerial department, Ofsted, is accountable in practice, if not in law. That is immensely helpful. Ofsted had two hearings a year before the Select Committee; those hearings generated substantial reports that covered a wide range of Ofsted’s activities, including changes to its responsibilities, the implementation of new legislation, value for money, and the means by which Ofsted develops its relationship with schools. I am sure, Mr. Gale, that you can see the analogies with the Charity Commission emerging. It will have to develop its relationship with charities and implement new legislation. It will have an awful lot of money and will, I hope, deliver good value for it.
On the Education and Skills Committee, I was able to question the decisions of Ofsted. For example, I questioned why it defined a particular local education authority as being “satisfactory” when in fact it was deeply unsatisfactory in a number of particulars. I am pleased to say that that local education authority is no longer under Liberal Democrat control, partly, I am sure, as a result of the answers that I got from Ofsted. The point is that the commission needs to be accountable. It is fine—excellent—that it is made clear that the commission is not under the direction of any Minister of the Crown, but it has to be under the direction of someone. In my view, a parliamentary Select Committee is where that accountability would appropriately lie. In line with the suggestion of the Association for Charities and many other organisations, I hope that the Minister will find a way, on Report, to bring us some good news on how the commission will be accountable in future.

Martin Horwood: I have a lot of sympathy with the hon. Gentleman’s amendment—or I did, before his speech. Perhaps I will get my own back in a minute. He makes a serious point: the Charity Commission is an extraordinarily powerful body. That came home to me when I worked for Oxfam; recently, its reputation, and its very future as a charity, had been under question, largely because members of the Conservative party, in those days, seemed less convinced of the presumption of public benefit attaching to organisations. I speak of organisations such as Oxfam, which not only address the relief of poverty, but seek to prevent it by addressing its fundamental causes, and campaigning on that basis. As I say, Oxfam’s reputation, and indeed its future as a charity, did, in one sense, hang in the balance, and depended on the judgment of the Charity Commission. I am pleased to say that the Charity Commission came to enlightened and correct conclusions about the status of Oxfam, but had it not done so, it would have been a very serious matter that would have affected the lives of millions of vulnerable people from around the world, not just in the UK.
It is right that a body that has such powerful influence over some of the most vulnerable in our society and others is subject to the fullest scrutiny. Much in the Bill reflects that. It introduces bodies such as the charity appeal tribunal, which provides a court of appeal against the decisions of the Charity Commission. Nevertheless, a mechanism by which the commission might be brought before Parliament, perhaps through a Select Committee, would be desirable. Some of our later amendments reflect that. The Minister would be wise to reflect on some of the comments that the hon. Member for Isle of Wight made, except those about the Liberal Democrat local education authority, and consider, through legislation, regulation or his advice to the commission, some ways in which such parliamentary scrutiny might take place.

Edward Miliband: I am sorry that the amendment tabled by the hon. Member for Isle of Wight was defective, but I agreed with much of his speech and with the hon. Member for Cheltenham.
Part of the issue about clause 6 and scrutiny of the Charity Commission is that for a long time—I am not sure how long—responsibility for charities lay with the Home Office, and the relevant Select Committee was the Home Affairs Committee. As I said on Second Reading, the Committee has a lot on its plate, and charities were never going to be top of its list of priorities. Others with more experience of this House than myself will know more about procedure, but I do not think that it is really up to us to specify in legislation the relationship to the Select Committee. It is more a matter for Standing Orders.
This legislation is the first since 1960 to modernise the commission, and the commission recognises that the role of the modern regulator requires proper scrutiny by this House. My personal view is that the Public Administration Committee, which scrutinises other Cabinet Office matters, would provide the appropriate scrutiny. It is ably chaired by my hon. Friend the Member for Cannock Chase (Dr. Wright). I wish the clause to stand part of the Bill, but I shall return and, I hope, report further progress in my discussions with that Committee.

Helen Goodman: I have no more experience in this House than my hon. Friend, but the Charity Commission, as a recipient of public funds like other regulators, will be scrutinised by the National Audit Office and the Public Accounts Committee. It is a question of considering not so much the efficiency, which I hope hon. Members feel that Committee will deal with adequately, but the policies of the Charity Commission.

Edward Miliband: My hon. Friend makes a good point. The only thing I would say is that the NAO and the PAC have considered the Charity Commission in the past, but the examinations have been infrequent—every few years rather than annually or more than annually. I sense from this Committee a desire for regular scrutiny and regular Charity Commission appearances before a Select Committee. I hear what the Committee says, I shall continue discussions with other Members, and I hope to report progress, if possible, on Report.

Peter Bottomley: That is very welcome. The Committee needs to accept that charities law is now in the hands of a Minister who is not subject to a Select Committee is a matter of chance. That was not intended. No one seriously believes that the Government said, “We will make this arrangement to avoid a Select Committee taking interest.” The best thing we can do is accept that the situation is unlikely to continue for very long. We should request that, when convenient, the Government ensure that charities law goes to a Secretary of State who is subject to a Select Committee, and where possible, the commission and the Minister are answerable to this House.

Edward Miliband: I am grateful for that intervention. The Charity Commission has had a hard time today, but my final comment is that I think that there is a genuine desire in the Charity Commission to be properly scrutinised in what it is doing. Under the legislation it will have to submit an annual report to the House, not through the Home Secretary as was previously the case. I believe that there is a genuine desire for maximal scrutiny and accountability through the House and I hope that that can happen through our good offices.

Question put and agreed to.

Clause 6 ordered to stand part of the Bill.

Schedule 1

The Charity Commission

Martin Horwood: I beg to move amendment No. 72, in scheduleÂ 1,Â pageÂ 81,Â lineÂ 9,Â leave out ‘four’ and insert ‘six’.

Roger Gale: With this it will be convenient to discuss the following amendments:
No. 73, in scheduleÂ 1,Â pageÂ 81,Â lineÂ 23,Â at end insert—
‘(d) at least four members have particular experience of the charitable activity such as the Secretary of State may by regulations define.’.
Government amendment No. 57

Martin Horwood: The previous discussion on the responsibilities and powers of the Charity Commission is relevant to this provision too. One of the things that I have noticed, on moving from the charity sector to Parliament, is that there is a charming belief in this place that laws always have the right results once they are passed. [Interruption.] The more experienced Members do not share that belief, so I stand corrected. Sometimes, though, I think that when considering legislation we should introduce mechanisms to make it more likely that bodies will do what we intend them to do, so that the representative nature of bodies such as the Charity Commission is preserved.
There is some disquiet in the voluntary sector about the operation of the Charity Commission in practice and about the need for it to reflect the wider population in two important respects. The first such respect is the increasingly diverse nature of British society. It is probably unfair to say that the commission reflected the great and the good in the old-fashioned, traditional charitable sense, but there is certainly a risk that it does not reflect the full diversity of modern Britain. If it is considering religious charities, which may include Islamic charities, Buddhist organisations or others from a wider range of social and ethnic backgrounds than previously, it should perhaps be more representative of those communities as well.
The second important respect is the increasing trend toward representation of people who have direct experience as beneficiaries of a charity. That applies in the running of the organisations themselves. There is a clear trend among grant-giving bodies such as Comic Relief or the Big Lottery Fund and even Government Departments to insist on evidence that beneficiaries of charity services or service users are represented in the running of an organisation, and that would be a good principle to extend to the Charity Commission itself. I suggested an amendment that would have made that explicit, but the Clerks pointed out, in ruling it out of order, that almost everybody could be the beneficiary of some charity, and that therefore the provision would be rather meaningless, and I am sure that that might be right.
Amendment No. 72 would increase the minimum number of members of the commission from four to six, thereby increasing the likelihood of the commission being a more representative body in both those respects. It would also incidentally reduce the potential power of the chairman’s casting vote—a reduction that would be a desirable thing in any organisation. On a probing basis, I would like to test out the reason for having such a small number as the minimum number of members of the commission.
Amendment No. 73 specifically addresses experience of charitable activity. The original amendment that I drafted was rather more explicit about that experience being experience as a beneficiary or as a service user, but, as I explained, that has been ruled out of order. The revised amendment does what I did not really intend, which is to provide a new broad power for the Secretary of State. Under most circumstances that is the kind of thing that I stand up and indignantly oppose, so I am not sure that I am as enthusiastic about the re-drafted amendment as I was about my original one. Nevertheless we should take every opportunity to ensure that members of powerful bodies such as the commission—it will make rulings on charities rooted in particular communities, social backgrounds and ethnic origins and representing, for instance, people with disabilities—should wherever possible have experience of such services themselves. Ideally, the Charity Commission should include a person with disabilities and perhaps someone with a different ethnic background from the majority of its members. That is why I have proposed the amendments.

Tom Levitt: By an inadvertent slip of the tongue, I think, the hon. Gentleman suggested that under the Bill, the commission will have a minimum of four members. If he looks at the schedule, he will see that it will have a chairman and four members, so the minimum number will be five.
Although all of us are potential beneficiaries of charitable services in one form or another—citizens advice bureaux, for example, could benefit everyone—is the hon. Gentleman not stating the obvious by specifying such a measure in his amendment? No Minister would put forward the names of people who were not representative or potential beneficiaries. Is he not guilty once again of the Cheltenham principle in tabling an amendment that is harmless if not entirely necessary?

Martin Horwood: I am grateful for the hon. Gentleman’s great experience in the voluntary sector. The joke is beginning to wear a little bit thin, though, as we have now heard it four times during this debate, and I am not sure that it was entirely fair the first time, let alone the fifth or sixth.
The hon. Gentleman is correct up to a point, but I am not sure that it is always automatic that such an exalted body as the Charity Commission will necessarily represent the interests of users and beneficiaries. It is sensible and almost inevitable that it will represent people who know how to run a charity. Such people might be in the old mould and represent, if I might use a slightly pejorative phrase, the rather patronising traditional approach to charity as something done to people rather than something shared with people that empowers them.
We are moving toward a different understanding of charity that is about empowerment and giving the users and beneficiaries of charities the right to some say in how those charities are run. That is the kind of change that I am seeking to effect.

Roger Gale: Before we proceed, the Committee should know that there will shortly be a Division or Divisions in the House. It is customary to suspend the Committee for 15 minutes after the start of the Division or the second or final Division, whenever that is. There will therefore be a period of suspension.
Members will be gladdened to know that I have told the Government Whip that I am prepared to sit in the Chair for as long as it takes this evening, within reason. If Members wish to sit, they may do so. That will be a matter for negotiation among the Government and Opposition Whips, the Minister and others. Members may wish to take the opportunity of the Division to work that out.
I will say to the Committee, because I believe in making sure that people are aware of what is going on, that it will in any event be necessary at some point in the fairly near future for me to break the Committee, probably for an hour, to allow Committee staff something to eat. With that proviso, Members may now choose to negotiate their own positions.
Because a Government amendment is grouped with the amendments, it might be helpful if I call the Minister to speak to Government amendment No. 57 and then allow the Committee to debate the group. I shall not seek to restrict debate before I invite other Members to participate.

Edward Miliband: The purpose of Government amendment No. 57 is to maintain the status of the Charity Commission’s staff as civil servants. Without it, they might well cease to be so once the Bill is enacted. The amendment will deal with the effect of an earlier amendment agreed in another place whose stated intentions were to deal with concerns about the commission’s independence and to ensure that it was not under ministerial control.
I am glad to say that the Government feel that the Charity Commission’s independence has been made clear through the provisions of new section 1A(4), which states that, in the exercise of its functions, it should not be subject to the direction or control of any Minister of the Crown or other Department. The wording of my amendment would maintain the status of the Charity Commission’s staff as members of the home civil service. That is a common provision used in other legislation where non-ministerial Departments are established, for example, that which established the Food Standards Agency.

Martin Horwood: I shall ask what may sound like a mischievous question, but in fact it is genuine. Will the Parliamentary Secretary summarise the benefits to the staff of being classed as civil servants?

Edward Miliband: There are two choices for Government: the Charity Commission staff can be civil servants, because they are working for a Department, albeit a non-ministerial one, or there can bea non-Departmental public body approach. My understanding of this matter, which was fully considered by the Joint Committee and the strategy unit, is that there would be more control by Ministers of a non-Departmental public body; such a body would be more subject to the direction of Ministers than a non-ministerial Department. People are clear that in regulating for food safety, the FSA, for example, operates transparently and independently. That is a good model for us to follow.
The Charity Commission already has delegated authority on behalf of the Minister for the Civil Service to determine the number and grading of its posts and the terms and conditions of employment, in so far as they relate to remuneration allowances, and so on. The commission is only required to agree the overall pay remit with the Treasury. It takes its own decisions on terms and conditions of service within a broad framework and has some latitude, while remaining a non-ministerial Department.
The amendment is important to the board and staff of the Charity Commission, because without it the commission might end up in the unique position of being the only Department whose staff are not in the civil service. That is the basis of the amendment, which I commend to the Committee.

Peter Bottomley: I welcome the Parliamentary Secretary’s response. The Government amendment is sensible. I read it as saying that Ministers will not get involved in the appointment of the chief executive; that is left to the Charity Commission, which is a good idea.
I ought to acknowledge and put on the record that I am and have been a trustee of a large number of charities, and so has my wife, who is also involved in headhunting in the charitable field.
The Parliamentary Secretary has chosen the right form for the Charity Commission. Ministers have much more power over things that they do not directly control than those over which they have closer control, such as Departments, from which they are kept further away. That helps keep away some of the malevolence or frustration that is occasionally expressed by Ministers.
I think that the amendment is saying that the number of charity commissioners, plus the chairman, should increase. However, that is not necessary. It is clear that the Government intend to appoint six, seven or eight. Having a low number means that the commission can still exist if one member has a car crash, another is struck off and somebody else retires.
Martin Horwoodrose—

Sitting suspended for Divisions in the House.

On resuming—

Martin Horwood: I was on the point of begging to ask leave to withdraw my amendment. However, I shall not do so right now because, on reflection, I have realised that that would deny us the valuable opportunity of hearing the Minister’s comments.

Edward Miliband: I will be brief.
On amendment No. 72, the Bill makes significant improvements to the Government’s arrangements for the commission. It enables the board to reflect legal and accounting expertise, a Welsh perspective and the diversity of the sector.
It is our strong intention to appoint nine members to the board. In accordance with the wise words of the hon. Member for Worthing, West, we have to plan on the basis that if there were some act of God, the commission could carry on functioning. I hope that the hon. Member for Cheltenham will withdraw the amendment. We want a commission of nine because that is far more likely to represent the diversity of the sector and be an effective board for the Charity Commission.
Amendment No. 73 does not reflect the intentions of the hon. Member for Cheltenham. I have already spoken about Government amendment No. 57, which I hope will be supported.

Martin Horwood: I am grateful that the Minister has the strong intention to appoint nine members to the commission. I am reassured by that, as I am by his comments on amendment No. 73. However, I hope that he will take on board the comments made about having not only a more socially and ethnically representative commission, but one that, for instance, includes somebody with disabilities. We should also look at the users and beneficiaries of charities as possible members of the commission; that would be in line with the general trend towards the empowerment and representation of users and beneficiaries in the sector as a whole.
I did not refer to Government amendment No. 57 and am still slightly mystified about the supposed huge benefit that attaches to commission members’ belonging to the civil service. I am sure that that is great and laudable, but this is my first public sector job and I sometimes find it a little rigid compared to my previous experience in the business and charity sectors. I am not sure that it is necessarily right rigidly to prescribe terms and conditions for any organisation in that way. However, I take it on trust that the move is sensible in the context of the Government as a whole. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 57, in scheduleÂ 1,Â pageÂ 82,Â leave out lines 38 to 43 and insert—
‘(2) The terms and conditions of service of persons appointed under sub-paragraph (1) are to be such as the Commission may determine with the approval of the Minister for the Civil Service.’. —[Edward Miliband.]

Martin Horwood: I beg to move amendment No. 65, in scheduleÂ 1,Â pageÂ 84,Â lineÂ 36,Â at end insert
‘and shall publish it on the Commission’s website.’.

Roger Gale: With this it will be convenient to discuss amendment No. 7, in scheduleÂ 1,Â pageÂ 85,Â lineÂ 13,Â at end insert
‘; and
(c) attendance by as many representatives of charities as reasonably practicable.’.

Martin Horwood: The amendment is very simple.In the spirit of e-government, inclusiveness and accessibility, it aims to extend the publication of the commission’s report, which would normally simply be laid before Parliament. The amendment would add the report to the commission’s website, as opposed to simply the parliamentary website, so that it would be there for any affected charities to read and access in the easiest form possible. I hope that hon. Members will happily support that.
In amendment No. 7, with which mine has been grouped, the Conservatives suggest the organisation of an annual meeting of the Charity Commission, which would have to maximise the attendance of charity representatives. That objective seems entirely laudable. In keeping with the Cheltenham principle, it is both harmless and desirable, and I therefore support it.

Andrew Turner: Amendment No. 7 does not follow the Cheltenham principle because it is harmless but necessary—organisations are good at organising their annual meetings at inconvenient times in inconvenient places. I suspect that the Charity Commission would not be doing this intentionally. However, the most sensible time from its point of view would be lunchtime on a Wednesday but from their trustees’ point of view it would probably be at a weekend. That is why I hope that the commission will take account of this when deciding when and where to locate its annual general meeting.

Peter Bottomley: May I suggest that we can trust the Charity Commission to have more than one meeting? The annual meeting does not have a legal status except it may be required by the legislation. I would hope that the Charity Commission is similar to the BBC and that it will go around the country so that trustees of local charities can be in attendance and raise issues.
When making a decision that could go either way, the Charity Commission ought to go out to public consultation. I can give one example that would be relevant to an annual meeting, which is the suggestion that the commission will pick out one or more Olympic sports and say that they are not charities. It would be useful at a public meeting, or even a private one, for the Minister to say to the Charity Commission, “Do not try and pick out one or two of the Olympic sports and say that they are not charitable.”

Alun Michael: In relation to maximising the number of representatives, may I ask the Committee to consider that the case made by the hon. Member for Cheltenham sounds entirely reasonable because it is a matter of getting an effective discussion that involves the sector? However, there is a danger with the wording that success will be measured merely by numbers, in which case the commission would take Wembley stadium for the meeting. However, that might be less productive and less challenging to the commission in terms of debate and engagement.

Edward Miliband: I fear that—I hate to end the evening on an uncharitable note—both amendments follow the Cheltenham principle. Neither of them is necessary. I hope that I can explain why to the Committee.
The Bill already requires the commission to publish its annual report and lay a copy before Parliament, as right hon. and hon. Members know. The commission’s publication scheme also sets out the classes of information that it intends to make available to the public as a matter of course, the manner in which it intends to publish the information and whether a charge will be made for that information.
Publication schemes are intended to encourage organisations to publish more information proactively. The commission’s publication scheme includes details of its annual report, which it makes freely available on its website. It is also available in print.

Robert Flello: Does my hon. Friend agree that amendment No.65 puts a technological limit on the Bill? For example, we are already moving towards podcasts. By having websites, what happens in a few years’ time when they are old hat and there is a new form of technology? Does my hon. Friend agree that, by being prescriptive, we are probably being counter-productive?

Edward Miliband: My hon. Friend makes an excellent point. His e-sophistication is greater than mine, and I suspect, than that of most members of the Committee.
The Bill already requires the commission to publish its annual report. The commission’s publication scheme provides for it to be made available on the commission’s website. That is an example of the aforementioned principle and therefore I hope that the hon. Gentleman will withdraw his amendment.
That takes me to amendment No. 7, which encourages the Charity Commission to ensure
“attendance by as many representatives of charities as reasonably practicable.”.
I would say—I hesitate to be the defender of the Charity Commission on this occasion and I do not intend to be—that we need to understand what the commission is doing. The Bill sets out detailed requirements for the commission about the timing of advance publicity of the AGM. The commission will be required to take reasonable steps to notify all registered charities of the arrangements for the AGM and to publish details bringing it to the attention of the general public. That will ensure that the main stakeholders in the work of the commission are aware of the AGM.
Since last year—even before the Bill has been passed—the commission has been holding an open AGM as a matter of good practice. It has notified all the main registered charities—there are more than 150,000—of the AGM’s details in advance. It has already communicated, to all the main charities on the register, details of the AGM that will be held later this year.
The commission does, however, limit the number of attendees to two from each charity, although I think that all hon. Members will agree that that is sensible. I wonder what would happen if all, or even asignificant proportion, of the 150,000 charities sent representatives to the meeting—Wembley stadium, even in its rebuilt form, would not be big enough.
The commission is therefore taking important steps to make itself as open as possible and to encourage as many representatives as possible to attend its annual meeting. However, I take on board the interesting and, once again, wise words of the hon. Member for Worthing, West about the need for the commission not only to hold an annual general meeting, but to have a roadshow at which it can talk about its work. I am sure that the commission will be listening and will read the report of our proceedings, and I hope that it will take up that suggestion.
Having said all that, however, I should repeat that neither amendment is necessary. I hope that the hon. Member for Isle of Wight will not press amendment No. 7.

Martin Horwood: I am intrigued by the suggestion from the hon. Member for Stoke-on-Trent, South that the commission’s annual report might be translated into a podcast. Given that podcasts are live-action broadcasts, that would require somebody to sit there reading the report, which might make for a fairly boring podcast and an enormous file size. I am not sure that the hon. Gentleman is quite right about that.

Robert Flello: I was merely illustrating the fact that there are alternative technologies out there, and who knows what tomorrow will bring.

Martin Horwood: I think that tomorrow will almost certainly bring another Charities Bill before the web becomes obsolete, given that the Government appear to revisit legislation fairly regularly. However, I take the hon. Gentleman’s point in the spirit in which it was meant and I entirely agree that there are other technologies out there. The point has been made that there are wider technologies, and I hope that the Minister takes on board the general intention to provide the report in as many media as possible. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1, as amended, agreed to.

Schedule 2 agreed to.

Further consideration adjourned.—[Liz Blackman.]

Adjourned accordingly at seven minutes to Seven o'clock till Thursday 6 July at Nine o'clock.